Constructing a Quality-Adjusted Price Index for a Heterogeneous Oligopoly
Both the theory and practice of using hedonic regressions to remove quality effects in price indexes are implicitly developed for monopolistic competitive markets. In this paper, we theoretically and practically analyse the application of a standard hedonic regression for an oligopoly. In the theoretical work, we recast how for an oligopoly the standard hedonic regression may be unstable. Then in the empirical work, we recommend using the weighted imputation method for constructing an index and estimating separate hedonic regressions for market segments. We apply these recommendations to estimating a quality-adjusted price index for the Australian passenger vehicle market and find they make a substantial difference. Copyright Blackwell Publishing Ltd and The Victoria University of Manchester, 2004.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 72 (2004)
Issue (Month): 4 (07)
|Contact details of provider:|| Postal: |
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1463-6786
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=1463-6786|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
- repec:ltr:wpaper:2000.06 is not listed on IDEAS
- Ariel Pakes, 2003.
"A Reconsideration of Hedonic Price Indexes with an Application to PC's,"
American Economic Review,
American Economic Association, vol. 93(5), pages 1578-1596, December.
- Ariel Pakes, 2002. "A Reconsideration of Hedonic Price Indices with an Application to PC's," NBER Working Papers 8715, National Bureau of Economic Research, Inc.
- Feenstra, Robert C, 1995.
"Exact Hedonic Price Indexes,"
The Review of Economics and Statistics,
MIT Press, vol. 77(4), pages 634-53, November.
- Robert C. Feenstra, 1995. "Exact Hedonic Price Indexes," NBER Working Papers 5061, National Bureau of Economic Research, Inc.
- Feenstra, R.C., 1995. "Exact Hedonic Price Indexes," Department of Economics 95-11, California Davis - Department of Economics.
- Feenstra, R.C., 1995. "Exact Hedonic Price Indexes," Papers 95-11, California Davis - Institute of Governmental Affairs.
- Gordon, Robert J., 1990. "The Measurement of Durable Goods Prices," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226304557.
- Kenneth L. Judd, 1983.
"Credible Spatial Preemption,"
577, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Caplin, Andrew & Nalebuff, Barry, 1991.
"Aggregation and Imperfect Competition: On the Existence of Equilibrium,"
Econometric Society, vol. 59(1), pages 25-59, January.
- Andrew Caplin & Barry Nalebuff, 1990. "Aggregation and Imperfect Competition: On the Existence of Equilibrium," Cowles Foundation Discussion Papers 937, Cowles Foundation for Research in Economics, Yale University.
- David Prentice & Xiangkang Yin, 2004.
"Constructing a Quality-Adjusted Price Index for a Heterogeneous Oligopoly,"
University of Manchester, vol. 72(4), pages 423-442, 07.
- Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
- Aviv Nevo, 2001.
"New Products, Quality Changes and Welfare Measures Computed From Estimated Demand Systems,"
NBER Working Papers
8425, National Bureau of Economic Research, Inc.
- Aviv Nevo, 2003. "New Products, Quality Changes, and Welfare Measures Computed from Estimated Demand Systems," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 266-275, May.
- Thompson, R S, 1987. "New Entry and Hedonic Price Discounts: The Case of the Irish Car Market," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 373-84, November.
- Richard Schmalensee, 1978. "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 305-327, Autumn.
- Arguea, N.M. & Hsiao, C., 1992.
"Econometric Issues of Estimating Hedonic Price Functions- with an Application to the U.S. Market for Automobiles,"
9203, Southern California - Department of Economics.
- Arguea, Nestor M. & Hsiao, Cheng, 1993. "Econometric issues of estimating hedonic price functions : With an application to the U.S. market for automobiles," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 243-267, March.
- Bresnahan, Timothy F, 1987. "Competition and Collusion in the American Automobile Industry: The 1955 Price War," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 457-82, June.
- Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1.
- Cowling, Keith & Cubbin, John, 1972. "Hedonic Price Indexes for United Kingdom Cars," Economic Journal, Royal Economic Society, vol. 82(327), pages 963-78, September.
- Triplett, Jack E, 1969. "Automobiles and Hedonic Quality Measurement," Journal of Political Economy, University of Chicago Press, vol. 77(3), pages 408-17, May/June.
- Jonathan Murray & Nicholas Sarantis, 1999. "Price-Quality Relations and Hedonic Price Indexes for Cars in the United Kingdom," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 5-27.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- David Prentice & Xiangkang Yin, 2000.
"Measuring Quality-Adjusted Inflation Rates for a Heterogeneous Oligopoly,"
2000.06, School of Economics, La Trobe University.
- Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-75, November.
- Katharine G. Abraham & John S. Greenlees & Brent R. Moulton, 1998. "Working to Improve the Consumer Price Index," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 27-36, Winter.
- Michael J. Boskin, 1998. "Consumer Prices, the Consumer Price Index, and the Cost of Living," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 3-26, Winter.
- Silver, Mick, 1999. "An Evaluation of the Use of Hedonic Regressions for Basic Components of Consumer Price Indices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 41-56, March.
- Shigenori Shiratsuka, 1995. "Automobile Prices and Quality Changes : A Hedonic Price Analysis of Japanese Automobile Market," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 13(2), pages 1-44, December.
When requesting a correction, please mention this item's handle: RePEc:bla:manchs:v:72:y:2004:i:4:p:423-442. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.